Address by Prime Minister Jean Chrétien
To the International Monetary Conference

June 3, 2002
Ottawa, Ontario

My first words tonight are to welcome you to Canada.

For anyone who might have thought politics in Canada is dull, you who arrived yesterday, can go home and tell the real story.

I want first to pay tribute to the former Minister of Finance Paul Martin. He was a superb Minister of Finance for Canada. And he represented Canada with great distinction abroad. We are all sorry to see him leave.

At noon today you met our new Finance Minister John Manley. He has been an outstanding minister since 1993. And he will be a first class Minister of Finance.

I want to assure everyone that the economic policies of our government will not change. Our commitment to balanced budgets, debt and tax reduction remains absolutely firm. Regardless of who is Minister of Finance.

Ladies and gentlemen, if recent world events have taught us anything, it is the importance of international cooperation to promote world financial and economic stability. Your involvement in that effort is crucial.

Globalization and the increasingly connected interdependent global financial system have made it more critical than ever to encourage and maintain open communications between governments, central banks, financial institutions, and international financial organizations.

That is what the IMC is all about. It has become an important forum for discussing the pressing economic and monetary issues facing all of us.

Already in your deliberations today, you have discussed demographic trends and the future of the world's stock exchanges. Tomorrow, you will examine social responsibility in our increasingly interdependent world.

The issues discussed at IMC meetings each year are central to our common goal: increasing global prosperity. And that is the challenge to which we all must rise.

This goal must be reflected in our domestic policies and in the ways in which we reach out to other countries.

Now let me say that Canadians are not known for bragging. But if I could break from tradition, I would like to take a few minutes and talk about what we've accomplished in Canada in recent years.

The fact is that Canada has made tremendous progress in encouraging prosperity here at home. As you heard earlier today, the IMF and OECD both predict that Canada will lead the G7 in growth this year and again next year.

Our nation's success is a testament to what can be achieved through responsible fiscal and monetary policy.

When this government came to power in 1993, Canada's fiscal situation was bleak. We had a $42 billion budgetary deficit and our debt-to-GDP ratio was more than 70 per cent. Moreover, the net foreign debt of the economy was about 40 per cent and rising.

When we took office, Canada was coming out of a recession that was more severe than in the U.S. And our recovery was slower.

Today I am proud to tell you how far we have come since 1993.

Our budget balance is in surplus for the fifth year in a row. And we expect to post surpluses in the next two years as well. Our debt-to-GDP ratio has fallen below 50% for the first time since 1985-86. The net foreign debt of the economy has fallen sharply, and is expected to be below that of the U.S. for the first time on record.

Putting our fiscal house back in order has allowed us to make the largest personal and corporate tax cuts in Canadian history.

As of the end of this year corporate income taxes will be lower in Canada than in the U.S. And our capital gains tax is already lower than in the U.S.

But that is not all. Our fiscal discipline allowed Canada to avoid a recession during the global economic slowdown seen over the last year. Our budget surplus allowed us to provide stimulus to the economy through timely tax cuts and strategic investments in key areas.

Our fiscal and monetary credibility made it possible for the Bank of Canada to stimulate the economy with the lowest interest rates in 40 years.

At the same time, our economy is more diverse and stable. Commodities now account for only about one-third of Canada's exports, as opposed to 60% 20 years ago.

And Canada's economy will continue to grow and diversify as investors begin to see the progress we've made and the advantages of doing business and investing here.

Clearly we have succeeded in making Canada an economic and fiscal leader.

But we must not be content to focus only on building prosperity in our own country. We must also recognize the obligations that we have outside our borders.

In a few weeks, I will chair the G8 Summit in Kananaskis. And much has changed since I first had the honour to hold the G8 Summit in Canada.

At the meeting in Halifax seven years ago, Russia was included in discussions for the first time. The addition of Russia made the G7 into the G8. At the time there were many who doubted the wisdom of such a step. No one now doubts that it was the right step to take.

The G8 has helped coordinate policies to bring stability to the global economy to assist the poorest of the poor, to protect our environment, to reduce tensions around the world and to combat terrorism. Russia has played a full and essential role in that effort.

And last week in Rome, a landmark agreement was signed, making Russia an active partner in the NATO alliance. This kind of co-operation between countries is unprecedented. And would have been impossible even 15 years ago.

It just goes to show how much change has taken place in the international arena in recent years.

But that kind of positive change is not benefiting everyone. On every continent except one, poverty is declining, health care and education standards are on the rise, and globalization and increased trade are creating prosperity.

But in Africa, poverty is increasing. Over 300 million people in Sub-Saharan Africa live below the international poverty line of one U.S. dollar a day.

Life expectancy in Africa is the lowest in the world. And continues to decrease with 25.3 million people suffering from HIV/AIDS. In about 5 years, the number of orphans left by the AIDS epidemic will equal nearly half the population of Canada.

On the continent as a whole, 40% of primary school age children do not go to school. And Africa is the only region where the number of children who don't receive primary education is rising.

Furthermore, Africa's share of world trade has plummeted accounting for less than 2%.

It should be clear that the continued marginalization of Africa from the globalization process, and the social exclusion of the vast majority of its people, present a serious impediment to the goal of global prosperity and economic stability.

Last summer in Genoa, G8 leaders decided to act on the New Partnership for Africa's Development. A remarkable plan proposed by progressive African leaders.

This plan recognizes Africa's own key role in eradicating poverty, bolstering sustainable growth and development, and actively participating in the world economy and body politic.

It lays out in clear terms how Africa, working in partnership with the rest of the world, can finally begin addressing the immense challenges it faces. Earlier this year, I visited six African countries to plan for the Kananaskis Summit.

What I heard there was tremendous enthusiasm and a clear commitment from African leaders to move forward with this partnership.

They also made it clear to me that they understand the relationship between addressing domestic challenges and attracting international investment. And their proposed plan reflects this understanding.

Where countries take meaningful steps to ensure peace and stability, where they encourage democratic rule and respect for human rights, where they pursue good governance and root out corruption, and where these principles are adhered to, the reward will come in the form of increased aid and investment.

Furthermore, the performance of African nations in implementing these principles would be rated on transparent criteria by their own peers.

This formula helps to bolster confidence in the proposed plan, since common sense tells us that we cannot continue indefinitely to provide development assistance to countries that do not subscribe to these principles and are not transparent in their dealings.

We will of course continue to assist people in need throughout Africa.

But our relationship cannot be based on aid alone. Aid alone cannot fix the massive problems that Africa faces. Aid alone does not encourage meaningful and sustainable progress and development.

Private investment must be the engine of African growth. And freer trade is the fuel.

We in the developed world need to look at how our own policies are excluding Africa from the benefits of a market-based economy. It is time for the United States and Europe to reduce agricultural subsidies. Just as Canada will eliminate tariffs on imports from least developed countries.

Right now, these subsidies exceed any benefits that African countries are getting through development assistance.

The annual level of all Official Development Assistance from developed countries amounts to some $50 billion. But agricultural subsidies by these same countries exceed $350 billion a year. Depressing prices and effectively shutting out producers from developing nations.

Global markets will be healthier, more efficient and, above all, fairer if we collectively reduce our subsidies.

Beyond encouraging fair and open markets, governments also need to encourage private sector investors to look to Africa for opportunities. And to include African nations in the global trading network.

Providing African countries with access to world markets, in addition to technical advice and support, will help to bring that continent into the mainstream of the global society.

And helping Africa to enjoy the benefits that globalization can bring is central to our common goal of increasing global prosperity.

My hope for the years ahead is that by working together, countries, organizations and individuals can create a more prosperous world. That we will continue to see growth, not just in our economies, but also in the rights of our citizens. Their rights to enjoy freedom and democracy. To pursue their own dreams. To contribute to their societies, their world and to the prosperity of future generations.

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